Kraken Addresses SEC Accusations, Asserts That Digital Assets Are Not Securities
In its legal response, Kraken asserted that digital assets, including well-known cryptocurrencies like Cardano (ADA), Algorand (ALGO), and Cosmos (ATOM), do not meet the criteria for investment contracts as defined by U.S. law.
Kraken Contends That Major Cryptocurrencies Are Not Securities
In its legal response, Kraken asserted that digital assets, including well-known cryptocurrencies like Cardano (ADA), Algorand (ALGO), and Cosmos (ATOM), do not meet the criteria for investment contracts as defined by U.S. law.
The exchange maintains that these assets, along with others available on its platform, should not fall under the jurisdiction of the SEC.
“Kraken has not breached Sections 5, 15(a), and 17A of the Securities Exchange Act of 1934, as ADA, ALGO, ATOM, FIL, FLOW, ICP, MANA, MATIC, NEAR, OMG, and SOL are not classified as securities or investment contracts,” the legal document asserts.
Kraken Critiques SEC's Regulatory Tactics
The exchange has voiced strong criticism of the SEC's regulatory methods, alleging that the agency is exceeding its jurisdiction in a sector that lacks definitive regulatory frameworks.
“The SEC lacks the authority to oversee Kraken’s digital asset trading platform, as these Digital Assets do not qualify as securities or investment contracts,” the filing asserts.
Kraken further pointed out that the SEC's interpretation of securities laws concerning digital assets is ambiguous, stating that it did not receive “fair notice” about its legal responsibilities.
Notable legal experts in the cryptocurrency space, including Stuart Alderoty from Ripple and Paul Grewal from Coinbase, have echoed similar concerns regarding the SEC's approach to crypto-related matters.
Alderoty characterized the SEC’s position on “crypto asset securities” as confusing and inconsistent, while Grewal underscored the contradictions in the regulator’s assertions, particularly in its case against Ripple involving XRP.
Recently, a coalition of seven U.S. states has united to contest the SEC's regulation of cryptocurrency.
Under the leadership of Iowa Attorney General Brenna Bird, these states have submitted an amicus brief asserting that the SEC's efforts to regulate cryptocurrencies represent a "power grab" that could hinder innovation, negatively impact the crypto industry, and exceed the agency's jurisdiction.
In a separate development, Kraken has encountered a legal challenge in Australia.
Last month, the Federal Court ruled against Bit Trade, a subsidiary of Kraken's parent company, Payward Incorporated.
The court determined that the platform has violated section s994B(2) of the country's Corporations Act since October 2021.
In 2020, Kraken acquired Bit Trade to provide digital asset services in Australia.
